An Empirical Study on the Aftermarket Performance of Nordic IPOs

Anja Pedersen Slettebø & Sofie Henriette Sørheim Mørland

Student thesis: Master thesis

Abstract

This thesis investigates the aftermarket performance of private equity-backed and non-sponsored IPOs, using a sample of 239 IPOs issued in the Nordic countries between January 1st 1997 and December 31st 2012, where the aftermarket performance is measured by comparing each IPOs performance, calculated by both the CAR and BHAR approach, to a representative benchmark in the short-, medium- and long term. Further on, four main focus areas are covered in the thesis, where three investigate the effect of different IPO characteristics on aftermarket performance, and one investigate the effect of a specific IPO characteristic on the growth in value added to society in a long term perspective. Thus, the thesis investigates the long run effects of private equity ownership, market-to-book ratio and IPO activity on the aftermarket performance of the IPOs, in addition to investigate the effect of private equity ownership on the three-year growth in value added to society. In the long run, we find no significant effects of being private-equity backed on aftermarket performance, nor do we find significant effects of being floated in a market characterized by low IPO activity. However, we find that the IPO aftermarket performance is positively related to having a low market-to-book ratio at floating date. Furthermore, in a three-year perspective, we find no significant effect of being private equity-backed on the growth in value added to society.

EducationsMSc in Applied Economics and Finance, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2016
Number of pages152
SupervisorsLisbeth la Cour